Fact Check: Activist Letter on Crude Oil Exports Short on Facts

With momentum building to lift the 1975 ban on U.S. crude oil exports, a handful of activist environmental groups who are opposed to affordable energy and the jobs they create, sent an open letter to U.S. Senators advocating that the ban remain in place. The claims made in the letter are not supported by the facts, and stand starkly at odds with a growing consensus of independent research and government analysis, editorial boards, thought leaders and think tanks from across the political spectrum — all of which point to significant benefits for U.S. consumers, our economy and America’s geopolitical standing in the world from removing the ban.

We take a closer look at some of their claims below and offer important facts that need to be considered in determining the outcome of this important public policy matter.

FACT:S. crude oil exports will have a negligible impact on global carbon emissions due to the fact that U.S. crude oil exports would largely serve as a substitute for other global sources of supply from places like Iran. Additionally, in terms of global oil production, the U.S. has the most robust environmental regulations in the world, meaning that oil produced here is done to the highest standards of safety and environmental responsibility. Policymakers in the Obama Administration and in Congress are well aware of our strong environmental standards.

John P. Holdren, senior adviser to President Obama for science and technology: “If you’re going to be using oil and gas, it’s better to produce it here than somewhere else. We have by far the strongest environmental and safety oversight of any country.”

Mark Warner, U.S. Senator from Virginia: ““The notion of increasing America’s energy output and at the same time not stepping back from our commitment to take on the very real threat of climate change are in no ways contradictory… The World is using a certain amount of hydrocarbons. I candidly believe that American hydrocarbons are both extracted in a cleaner, more efficient way than Venezuela, than Russian…I believe you’re talking here about substitution, not increasing, carbon footprint.”

FACT: There were approximately 32 gigatonnes of global carbon emissions in 2014. Allowing U.S. oil exports will not materially affect global carbon emissions. Energy and Environment scholar Benjamin Zycher made this point while responding to questions at a Senate Banking Committee hearing: “In the context of this hearing the effect of the impact of ending the export ban in terms of climate change issues, which is an issue you have raised, is literally zero.”

FACT: Global consumption of petroleum resources is expected to grow, regardless of the U.S. decision to export crude oil. The International Energy Agency projects that global crude oil consumption will increase from approximately 90 million barrels per day in 2014 to a range of 103.5 – 107 million barrels per day in 2040. Given these projected consumption levels, crude oil that is produced in the U.S. and exported to our allies and trading partners will not increase global oil consumption, rather it will displace oil from other regions of the world, many of which do not have our high safety and environmental standards.

Claim #3: “Lifting the crude oil export ban would imperil consumers…”

FACT: Consumers do not purchase crude oil, they purchase refined products, which experts and economic analyses have shown are based on the global price of crude oil, not the price of U.S. produced crude oil. As such, since U.S. exports would add supply to the global market, this will place downward pressure on both the world price of crude oil as well as gasoline and other refined products.

FACT: According to the U.Energy Information Administration, “Petroleum product prices in the United States, including gasoline prices, would be either unchanged or slightly reduced by the removal of current restrictions on crude oil exports.”

FACT: As noted above, every credible economic analysis and government study that has examined the ban on crude oil exports has determined that repealing the ban will reduce gas prices, increase GDP and tax revenue.

IHS Energy: “The higher US oil production resulting from a lifting of the ban will […] increase GDP by $135 billion.”

ICF International: “U.S. GDP is estimated to increase by $38.1 billion in 2020 if expanded crude exports were allowed.”

Brookings Institution: Lifting the crude export ban “will have a positive impact on GDP and welfare” and in every case analyzed, “there are positive percentage change impacts on GDP.”

IHS Energy: “Government revenues from corporate, personal and energy-related taxes and royalties are expected to increase under free trade policy. The cumulative addition to revenue is $1.3 trillion from 2016 through 2030.”

FACT: Responsible energy development provides meaningful tax revenue for local, state and federal agencies. These funds can be used for public infrastructure projects such as roads and bridges, schools and other public services. However, over the past year those revenues have declined, directly impacting the level of social and community services provided in many communities.

The Energy Information Administration reports that some states “derive a significant share of their unrestricted operating revenues from taxes on oil and natural gas production” and that declining revenues over the last year have squeezed state budgets. For example, Texas saw tax revenue from oil and gas product decline by 40 percent between August 2014 and January 2015.

A recent study by IHS, a global energy consultancy, on the tax impacts of allowing crude oil exports found that, “Government revenues from corporate, personal and energy-related taxes and royalties are expected to increase under free trade policy. The cumulative addition to revenue is $1.3 trillion from 2016 through 2030.”

FACT: Employment and wage-earning is at the core of sustaining healthy communities but over the past year, thousands of Americans who work in the oil industry have lost their jobs, directly, and negatively impacting communities across America. So far this year more than 100,000 Americans have lost their jobs in the U.S. oil and gas industry according to outplacement firm Challenger, Gray & Christmas. Additional jobs have been lost since that study was completed.

Removing the oil export ban can help reverse this trend. According to the Government Accountability Office (GAO), “Removing export restrictions is expected to increase the size of the economy, with implications for employment, investment, public revenue, and trade.”

A study by ICF International, a global consultancy, found that “The U.S. Economy could gain up to 300,000 jobs in 2020 when crude exports are allowed.”